The cost of listing on AIM has risen at its slowest rate in more than five years, a finding that could give rise to an increase in IPO activity on the junior market.
The cost of listing on AIM has risen at its slowest rate in more than five years, a finding that could give rise to an increase in IPO activity on the junior market.
Research from accountancy firm UHY Hacker Young finds that AIM listing costs, including professional fees and all other associated costs, rose by less than 1 per cent last year.
This compares to an average rise of 5 per cent in fees for each of the previous four years. The cost of listing is now 7.29 per cent of all funds raised (see table below).
| Year | % of total money raised |
|---|---|
| 2005 | 6.1 |
| 2006 | 6.2 |
| 2007 | 6.7 |
| 2008 | 7.0 |
| 2009 | 7.24 |
| 2010 | 7.29 |
UHY Hacker Young attributes the current price competitive nominated advisor market for keeping AIM listing costs down. Laurence Sacker, partner at the accountancy, adds, ‘This is good news as AIM needs to keep the cost of listing down in order to keep well ahead of it international competitors.’
The findings come on the back of a sharp increase in the number of AIM listings in 2010, up to 65 from 18 in 2009. So far in 2011 there has been 14 listings on AIM with the most recent being food business Uniq in early April.
Other recent listings on AIM include sporting goods retailer JJB Sports, digital marketing agency dotDigital and real estate business Top Creation Investments.
Sacker says the tightening up of the regulatory environment around the AIM market since 2005 is the biggest cost factor to listing on AIM. In recent years the level of due diligence undertaken by companies planning to list has increased. However, the findings by UHY Hacker Young suggest that this trend has now levelled off.
Sacker concludes: ‘If a company plans its IPO on AIM properly then the costs can be quite easily controlled. The value a company gets from an AIM listing is far greater than a listing on other junior stock markets.’
